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Judgments - Fraser and another (Appellants) v. Canterbury Diocesan Board of Finance and others (Respondents)

HOUSE OF LORDS

SESSION 2005-06

[2005] UKHL 65

on appeal from: [2004] EWCA Civ 15

 

OPINIONS

OF THE LORDS OF APPEAL

for judgment IN THE CAUSE

 

Fraser and another (Appellants)

v.

Canterbury Diocesan Board of Finance and others (Respondents)

 

 

 

Appellate Committee

 

 

Lord Nicholls of Birkenhead

Lord Hoffmann

Lord Hope of Craighead

Lord Walker of Gestingthorpe

Lord Brown of Eaton-under-Heywood

 

 

Counsel

Appellants:

Christopher Nugee QC

Caroline Furze

(instructed by William Blakeney)

 

Respondents:

Christopher McCall QC

Vivian Chapman

(instructed by Furley Page)

 

 

 

Hearing date:

18 July 2005

 

 

 

on

Thursday 27 OCTOBER2005

 


HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

Fraser and another (Appellants) v. Canterbury Diocesan Board of Finance and others (Respondents)

[2005] UKHL 65

LORD NICHOLLS OF BIRKENHEAD

My Lords,

    1.  I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hoffmann and Lord Walker of Gestingthorpe. For the reasons they give, with which I agree, I would allow this appeal.

LORD HOFFMANN

My Lords,

    2.  By a deed dated 5 April 1866 Jane Mercer and Lewis Wigan conveyed land in Maidstone to trustees under the terms of the School Sites Act 1841 (4 & 5 Vict, c 38) on trust—

    "to permit the said premises and all buildings thereon erected or to be erected to be forever hereafter appropriated and used as and for a school for the education of children and adults of the labouring manufacturing and other poorer classes in the Ecclesiastical District of Saint Philip Maidstone aforesaid and for no other purpose."

    3.  The deed went on to provide that the school should always be "in union with and conducted according to the principles and in furtherance of the ends and designs of the National Society for promoting the education of the poor in the principles of the Established Church throughout England and Wales". There followed detailed provisions for ensuring that the management of the school should always be in the hands of members of the Church of England. The Canterbury Diocesan Board of Finance ("the DBF") are successors in title to the original trustees.

    4.  Section 2 of the School Sites Act 1841 empowers both fee simple and more limited owners to grant in fee simple up to one acre of land—

    "as a site for a school for the education of poor persons, or for the residence of the schoolmaster or schoolmistress, or otherwise for the education of such poor persons in religious and useful knowledge"

    5.  The section then goes on to provide that—

    "upon the said land being so granted as aforesaid, or any part thereof, ceasing to be used for the purposes in this Act mentioned, the same shall thereupon immediately revert to and become a portion of the said estate held in fee simple or otherwise …"

    6.  The effect of this section was that if a reverter occurred but the trustees of the school remained in possession for 12 years, the title by reverter would usually become statute-barred: see In re Ingleton Charity [1956 ] Ch 585. Section 1 of the Reverter of Sites Act 1987 abolished the reverter of the freehold under the 1841 Act and substituted a trust for sale coming into existence when there would previously have been a reverter. The trustees of the school become trustees to hold the proceeds of sale for the persons who would previously have been entitled under the reverter. That prevented the trustees from acquiring a title by limitation because time does not run in favour of a trustee against his beneficiaries. But section 1(4) provided that the section conferred no rights upon any person as a beneficiary in relation to property in respect of which that person's claim was statute-barred before the Act came into force on 17 August 1987.

    7.  The school continued in operation until July 1995 when it was closed and the site sold. The appellants claim to be beneficiaries of the proceeds of sale under the statutory trusts created by section 1 of the 1987 Act. They are assignees of the persons whom, as a result of genealogical investigation, they allege would have been entitled to the reverter under the 1841 Act.

    8.  The DBF claim that the title of the appellants is statute barred because the reverter occurred long before the school closed and in any event before 17 August 1975. The title was therefore already barred when the 1987 Act came into force. The DBF also dispute the appellants' paper title but a preliminary issue was directed to be tried upon whether the title was in any event statute-barred.

    9.  The ground upon which a reverter is alleged to have taken place is that the school had long ceased to be used for the "education of children and adults of the labouring manufacturing and other poorer classes in the Ecclesiastical District of Saint Philip Maidstone" in accordance with the trusts of the deed. The evidence adduced to support this claim consisted of extracts from the school log book which had been published in a commemorative booklet published in 1963, the school register from 1931 to 1944, rate books which showed the rateable values of houses given in the register as the addresses of children at the school and statement by Mr R C Harris, who attended the school between 1947 and 1950. All this evidence was admitted by consent and without cross-examination.

    10.  An inference which the judge drew from this evidence was that some of the children had come from middle class streets of owner occupied houses. Mr Harris's father, who worked for the local electricity board, lived in such a street and owned his own house. A friend of his, whose father was a police inspector, came from a similar house. On the other hand, the rateable value of the house was not a sure guide to the affluence of the occupants because many appear to have been in multiple occupation or to have included shops. What could be said was that a mixed variety of children were admitted, some from very obviously poor backgrounds but some from more wealthy areas. From 1891 the school had been free for children over 3 (toddlers were then charged 1d a week) and there was no evidence that any child from the "labouring manufacturing and other poorer classes" had ever been refused entry.

    11.  The addresses in the register also showed during the period 1931-1947 about 16% of the children lived outside the ecclesiastical district of St Philip.

    12.  On the basis of this evidence, the DBF says that by 1947 the purposes for which the land was being used had changed. Instead of being used for the purposes of a school for the children of the labouring manufacturing and other poorer classes in the ecclesiastical district of St Philip, it was being used as a school for any children, whatever their means or place of residence. That brought about a reverter.

    13.  The first question raised by this appeal is the meaning of the words "upon the said land…ceasing to be used for the purposes in this Act mentioned". Does it mean for one of the three purposes mentioned in the Act, that is to say, (1) the education of poor persons (2) the residence of the schoolmaster or schoolmistress, and (3) otherwise for the education of such poor persons in religious and useful knowledge; or does it mean for the purposes specified in the grant? These had of course to be within one or more of the three statutory purposes but could be a good deal narrower. For example, the purpose specified in this deed fell within the statutory category of "the education of poor persons" but was narrower in being confined to (1) persons in the ecclesiastical district of St Philip and (2) education in accordance with the principles of the National Society.

    14.  As a matter of language, I should have thought that there was no doubt about the matter. The Act says "the purposes in this Act mentioned". It does not say "the purposes in the deed of grant mentioned". The National Society, which promoted the 1841 Act, would have been well aware of the difference. Their standard form of grant specified that the purpose of the school was to be education in accordance with the principles of the Church of England. That was the form used in this case. But the purpose mentioned in the Act was education in general.

    15.  That does not mean that the restrictions in the deed could have no effect. They could be enforced in the same way as those in any other charitable trust. But a breach of those restrictions would not have the drastic consequence of causing a reverter.

    16.  The matter is not however free from authority. In Attorney General v Shadwell [1910] 1 Ch 92 the terms of the grant were for practical purposes identical with those in this case, save that the parish was Northolt. In 1907 the school was closed, another school having been opened by the local authority nearby. Thereafter the building was used only once a week for a Sunday school. The Board of Education contended that there had been no reverter because although the land was no longer being used for the general education of poor persons, use as a Sunday school provided them with "religious and useful knowledge". The argument, at p 96, of Mr Cave KC for the successor to the grantor was that a reverter occurred if the land ceased to be used for the statutory purpose chosen by the grantor. It did not matter that it was still being used for some other purpose which he could have chosen but did not:

    "The provision for reverter means that the land is to revert if it ceases to be used for such of the purposes of the Act as are specified in the grant, namely, in this case, the first purpose only."

    17.  Warrington J accepted this argument. He said that the Act specified three purposes and that "the grantor may select his own purpose from amongst those three". In the judge's opinion, at p 99—

    "you must read 'the purposes in this Act mentioned' as meaning such of those purposes as are applicable to the case in question"

    and he went on to say:

    "looking at the substance of the matter, as I consider I am bound to do, I must hold that the premises have ceased to be used for the purposes in the Act mentioned."

    18.  This case may be regarded as having glossed the statutory language. But it has stood without criticism for nearly a century and I would not cast any doubt upon it. It does not however assist the DBF. It does not say that the "purposes in the Act mentioned" means the purposes in the deed mentioned. It says that if the grantor has chosen one of the three statutory purposes and the land ceases to be used for that statutory purpose, a reverter is not avoided because it can still be used for one of the other two statutory purposes. But the argument for the appellants in this case is that until 1995 the land was continuously used for the statutory purpose chosen by the grantor, namely the education of poor persons. Accordingly it is said that even if there was a breach of the trusts of the deed, there was no departure from the chosen statutory purpose.

    19.  The effect of Shadwell's case was considered by Rimer J in Habermehl v Attorney General [1996] EGCS 148. This involved another deed in terms virtually the same as those in Shadwell and this case, granting the land for use as a school for the education of poor persons in accordance with the principles of the National Society. In 1876 the school had become a "provided school" run by a School Board under the Education Act 1870. That meant that, by virtue of section 14(2) of the Act, no "religious catechism or religious formulary distinctive of any particular denomination" could be taught in the school. Teaching could therefore no longer be in accordance with the Anglican principles of the National Society. It was agreed by counsel on both sides that Warrington J had decided that the purposes mentioned in the Act meant the purposes mentioned in the deed. Given this concession, the decision of Rimer J that a reverter had taken place in 1876 was inevitable. But, for the reasons I have explained, I think that the concession was wrong.

    20.  No such concession was made in Fraser v Canterbury Diocesan Board of Finance [2001] Ch 669 where the Court of Appeal approved Habermehl. The judgment of Mummery LJ (at paras 27-35) says that Rimer J followed the "approach" of Warrington J in Shadwell and that his decision was correct. There is no further discussion. In my opinion the decision of the Court of Appeal on this point was wrong.

    21.  The question is then whether the evidence showed that during the period covered by the evidence the school had ceased to be used for the statutory purpose of educating poor persons. There was, as I have said, some evidence that the school had admitted some children who could not be described as poor persons. On the other hand, an indeterminate number of children undoubtedly were poor persons and there was nothing to show that any poor person seeking entry had been refused. In my opinion, this is insufficient material from which to draw the inference that the purpose of the school was no longer the education of poor persons. The admission of some children from better-off families is explicable on other grounds, for example, keeping up the numbers or income to make the school viable for the purpose of educating poor persons, or improving the education of poor persons by adding some children with a more literate home background or more demanding and articulate parents.

    22.  The judge found (in para 67) that—

    "the way in which the school was run indicates that its purpose was to educate not merely qualifying persons, but others as well. In my judgment it was a breach of trust for the school to have adopted a policy of educating children who were not resident in the ecclesiastical district of St Philip and who were not from the relevant social classes."

    23.  The judge nevertheless held that the school continued to be used for the purposes specified in the deed. That was not inconsistent with it being used for other purposes as well. He therefore decided that the claimants' title was not statute-barred. The Court of Appeal reversed this decision. Arden LJ accepted a submission that the judge's finding in paragraph 67, which I have quoted above, was inconsistent with the school still being for the purpose of educating poor persons. A "policy" of also educating other children meant that the purpose was now different, even though some of the children who fell within the new class of objects might be poor.

    24.  I do not think that the evidence supported a finding that the trustees of the school had acted in breach of trust, let alone a finding that the purpose of the school had become different. If there was any material to explain why they had admitted middle-class children or children from outside the parish, it would have been peculiarly within the knowledge of the DBF, who were successors to the trustees. But there was no evidence of any kind. Mr McCall QC, who appeared for the DBF, submitted that an inference of a decision to change the objects of the school should be drawn simply from the numbers of children from the middle-classes or outside the parish. The latter was estimated at 16% and the former were not quantified. I do not think that the DBF are entitled to ask the court to assume that their predecessors must have acted in breach of trust when other inferences such as I have suggested, consistent with a proper performance of their duties as trustees, can reasonably be drawn. As Mr Christopher Nugee QC said in reply, the school until it closed was a school which educated the poor of the parish of St Philip. There is no evidence inconsistent with the school having been used for that purpose.

For these reasons and those to be given by my noble and learned friend Lord Walker of Gestingthorpe, which I have had the privilege of reading in draft, I would allow the appeal and restore the answer which the judge gave to the preliminary issue.

LORD HOPE OF CRAIGHEAD

My Lords,

    25.  I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hoffmann and Lord Walker of Gestingthorpe. I agreed with them, and for the reasons that they have given I would allow the appeal and make the order proposed by Lord Walker.

LORD WALKER OF GESTINGTHORPE My Lords,

The School Sites Acts

    26.  This appeal is concerned with a grant made under the School Sites Act 1841 ("the 1841 Act"). That statute is still in force (though its operation has been affected by the Reverter of Sites Act 1987) and it has produced a good deal of litigation. This is the first appeal on the 1841 Act which comes to be decided by your Lordships' House (Attorney-General v Price was compromised during the hearing: [1914] AC 20).

    27.  The 1841 Act enables a grant of land (not exceeding one acre) to be made in favour of trustees for educational purposes identified in section 2:

    " … as a site for a school for the education of poor persons, or for the residence of the schoolmaster or schoolmistress, or otherwise for the purposes of the education of such poor persons in religious and useful knowledge"

The most striking feature of the 1841 Act, and the one which has given rise to most litigation, is the statutory reverter in the third proviso to section 2:

    "Provided also, that upon the said land so granted as aforesaid, or any part thereof, ceasing to be used for the purposes in this Act mentioned, the same shall thereupon immediately revert to and become a portion of the said estate held in fee simple or otherwise, or of any manor or land as aforesaid, as fully to all intents and purposes as if this Act had not been passed, anything herein contained to the contrary notwithstanding."

 
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